February Employment Recap: Terrible, horrible, no good, very bad data

There was not much that was good about jobs data from February. The headline number of payroll growth fell (marking the fourth contraction in the last seven prints), the unemployment rate rose to a strong 4.4%, the sector that helped keep payrolls afloat (private education and healthcare) saw the bottom fall out, and the labor force participation rate declined. There are some mitigating factors from February’s data (a labor strike, payback from January’s favorable weather conditions), but not enough to put much of a positive spin on today’s data . Nine of 14 sectors registered job losses and even excluding temporary factors, gains would have been muted at best. We have argued ( HERE ) that the labor market has been in a tenuous equilibrium, with hiring concentrated in just a few sectors and vulnerable to a correction, but with layoffs muted. Today’s print will reinforce the Fed’s doves ( Governor Waller most importantly), that January’s encouraging labor numbers were fool’s gold and that more cuts are warranted sooner rather than later. Our expectation is for a controlled cooling in the labor market that is ultimately arrested by strong growth. This remains our view over the next few quarters, but will the mood music be much better for hiring in March , with another round of tariff drama/uncertainty , higher energy inputs , and turmoil in the Middle East?